How can NRIs invest in the Indian equity markets?

Non Resident Indians are allowed to invest in India stock market under the portfolio investment scheme (PIS) of the Reserve Bank of India (RBI). Under this scheme NRIs can open NRE/NRO account which can be used for buying and selling of stocks.

Limitations for NRI

-> Total investment by NRIs cannot exceed 10% of the paid-up capital in an Indian company. The aggregate ceiling of 10 per cent can be raised to 24 per cent, if the General Body of the Indian company passes a special resolution to that effect.

-> NRI's can do transactions of purchase and sale in delivery based method. Speculative transactions are not allowed. What this means is that trading or buying and selling in intra-day is not allowed.

-> One of the drawbacks for NRIs is that being in a different geography, they might find it difficult to track the Indian markets. Under such circumstances, it's better to appoint a power of attorney.

Taxes

The taxation part is almost same for resident and NRI. However, there comes a difference while filing taxes. If an NRI has made a profit, tax is deducted at source and he has to set it off against losses, if any at the time of filing, and accordingly claim refund.

Income such as interest and dividend earned by NRI from portfolio investments acquired whether on repatriation basis or on Non- repatriation basis, can be remitted abroad provided applicable taxes are paid and he complies with RBI guidelines.